July 20, 2005

Using "Solvency" to Get SS Privatization

I believe the president should focus on putting Social Security on a sound footing. The best way to do that is to adjust benefits by increasing the retirement age, cutting back payments further for those who choose to retire early and indexing the growth in benefits to the consumer price index (that is, inflation) rather than to wages...

The inevitable result of benefit adjustments will be to reduce, slowly over time, the importance of Social Security in the overall retirement scheme...

Retirees would, very naturally, fill in the gap by saving more. The vehicle for those savings would be personal stock and bond accounts -- which already exist! There are 401(k) plans, IRAs, Roth IRAs, Keoghs, 403(b) plans and other tax-advantaged accounts. These should be consolidated under simplified rules.

This is the bait-and-switch of talking about making social security "fairer." Any cuts in benefits for the wealthy will just be replaced with even more lucrative savings tax benefits, even as social security is converted into a welfare system that can be isolated and targetted for cutbacks.